The S&P 500 closed lower on Wednesday after US President Donald Trump declared an interim deal to end the conflict with Iran was “over”, reigniting concerns over a prolonged conflict in the Middle East that sent oil prices sharply higher and weighed on investor sentiment.
Trump, speaking at the NATO summit in Turkey, said he had no interest in holding further talks with Iran and warned that Washington was likely to launch additional strikes later on Wednesday.
“The duration is the key here. How long does this go on?” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.
“If we see damage to Iranian infrastructure, the market may have to respond more seriously to that because there’s likely Iranian retaliation.”
The benchmark S&P 500 slipped 0.28% to finish at 7,482.71, while the Dow Jones Industrial Average dropped 1.09% to 52,348.39. The tech-heavy Nasdaq Composite outperformed, edging up 0.20% to 25,870.65 as gains in semiconductor stocks offset weakness in other technology names.
Chipmakers rebounded after Apple announced plans to spend more than US$30 billion under a chip supply agreement with Broadcom. Broadcom surged 4.8%, while Nvidia gained 3.65% after reports that China could allow leading artificial intelligence companies to purchase a limited number of its H200 chips.
“Any time you get an announcement from Apple about using your equipment, it’s pretty positive, especially when you have 2.5 billion Apple devices in people’s hands around the globe,” said Art Hogan, chief market strategist at B. Riley Wealth.
However, other technology heavyweights remained under pressure, with Microsoft and Alphabet each falling more than 1%, while Meta Platforms declined 2%. SpaceX also lost 0.8%, closing at its lowest level since its Wall Street debut in June.
Rising geopolitical tensions pushed Brent crude up 5.2%, lifting Treasury yields and adding to concerns that higher energy prices could fuel inflation and complicate the US Federal Reserve’s policy outlook. Minutes from the Fed’s June meeting showed policymakers remained concerned about inflation, while traders now see a higher probability of a rate hike by December.
The escalating conflict also weighed on travel-related stocks, with United Airlines and Delta Air Lines each falling more than 1%, while Carnival dropped 3.9% and Norwegian Cruise Line slid 1.9% as investors worried about higher fuel costs and softer travel demand.
Meanwhile, the International Monetary Fund lowered its 2026 global growth forecast to 3%, citing continuing risks stemming from the Middle East conflict.
Nine of the S&P 500’s 11 sectors ended in negative territory, led by industrials, which fell 3.41%, followed by materials, down 2.45%. Declining stocks outnumbered gainers by roughly 3.5 to one, while trading volume remained relatively light at 17.8 billion shares, below the 20-session average of 23 billion.
